What does the HO model predict will happen to the real returns to factors of production after trade occurs?
a. Labor and capital must be used together in production, and there is no room for competition for remuneration.
b. Capital owners always get the "gains from trade."
c. Resources used intensively in export industries (such as labor in China and capital in the United States) will see an increase in their returns, whereas the resources used intensively in importcompeting industries will see a decline in their return.
d. Poor nations will always get the least returns to their factors of production.
Ans: c. Resources used intensively in export industries (such as labor in China and capital in the United States) will see an increase in their returns, whereas the resources used intensively in importcompeting industries will see a decline in their return.
You might also like to view...
What are the two basic types of economic systems?
What will be an ideal response?
A problem with using the price of a product similar to the intermediate good sold on the market is
a. the market price includes a margin above marginal cost b. the product on the market may include costly features your downstream division does not use c. the product on the market may be cheap because it is not as high of quality as your downstream division uses d. all of the above